Start-ups wait for promised funding that never comesThe government’s lacklustre attitude towards start-ups has discouraged business innovators, entrepreneurs say.
A new fiscal year is about to begin, but the Business Credit Flow Work Procedure 2021 from the last fiscal year is yet to see the light of day.
The policy was slated to come into effect from the start of fiscal 2021-22, but it got thrown into the background when a new government led by KP Sharma Oli came in and revised the budget.
In October 2021, Finance Minister Janardan Sharma had said that the work procedure would be implemented soon to help start-ups and innovators obtain funding in a simple and quick way.
With the country struggling to emerge from the disruption caused by the pandemic and facing a possible economic crisis, a delay in the implementation of such key programmes not just kills business ideas but discourages youths from starting their own businesses, insiders say.
Dibakar Luitel, information officer at the National Planning Commission, said they received the draft work procedure from the Finance Ministry just a month ago and were looking at it. “We are working to finalise the document,” he said.
"After the work procedure gets the finishing touches, it will be sent to the cabinet for approval," Luitel said. “The implementation was held up with the change in government, and subsequent revisions to the budget,” he said.
He said that the work procedure would likely be enforced from the first month of the new fiscal year.
According to Dil Bahadur Gurung, spokesperson for the commission, the work procedure has also been revised. “The original work procedure said grants would be issued to start-ups, but that has been changed to subsidised loans,” Gurung said.
A start-up fund of around Rs10 million has been arranged, said an official of the National Planning Commission.
Presenting the budget for the fiscal year 2021-22, the then Finance Minister Bishnu Prasad Poudel said arrangements would be made to issue Rs2.5 million in seed capital at 1 percent interest against the project as collateral to encourage youth entrepreneurs to engage in start-up businesses.
The government has made similar promises in the past. Seven years ago, it had announced in its budget statement for fiscal 2015-16 that a Rs500 million fund would be set up to groom start-ups and innovators.
Again in 2019-20, the government announced a cash subsidy of up to Rs5 million for promising new businesses. It started preparing a work procedure, but that got nowhere.
In the last fiscal year 2020-21, the government created a Rs500 million start-up fund to issue loans at 2 percent interest to encourage innovative entrepreneurs hit by the pandemic. But hopeful start-ups were disappointed once again.
The government’s lacklustre attitude towards start-ups has discouraged business innovators, and there is no start-up business spirit in the market like in 2018-19 before the pandemic, entrepreneurs said.
Due to the liquidity crisis in the market, getting a loan to start a business or expand is not easy, they said.
Private sector representatives say that the government has not prepared any policy document for start-ups, and as a result, companies that created mechanisms to invest in them are finding it difficult to do so. Even banks and financial institutions are confused about investing in start-ups because of the absence of a definition of start-up, they said.
“The major challenge is that the government has not been able to clearly define start-up or prepare any policy,” said Ranjit Raj Acharya, chairperson of the Start-up and Innovation Committee at the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), in a recent interview.
"The government's lack of accountability will not send a good message, especially to entrepreneurs," said Kavi Raj Joshi, founder and managing director of Next Venture Corp.
"Everything just remains on paper with government officials being changed frequently," Joshi said. “The current finance minister has called us for a meeting to discuss start-up businesses two or three times, but nothing has happened,” he said.
Discussions were held when the late Narendra Raj Joshi was heading the Ministry of Industry, Commerce and Supplies, and even during the Oli administration, but they all came to naught, insiders said.
“There are people willing to do business, but there is no environment in terms of credit facility, research and development, investment environment, and tax and rent waivers,” Joshi said.
"Whoever forms the government talks about start-up policy and makes big plans, but fails to execute them."